He Broke My Plate. He was angry…really really mad…and why shouldn’t he be? After all, my 5-year old son wanted pizza for dinner and I made him a quesadilla. How dare I…what nerve! So, he slid his plate across the table, onto the floor, and it shattered. The first question you might ask is why would I give a 5-year old boy dinner on a real plate? The second question you might ask is why would I serve him on my good wedding China? Good questions…nicely done! Well, first of all, my son doesn’t usually behave this way and second, our good wedding china is what we use every day. So back off, okay?
The boy is simply uncomfortable because his Mom, the TravelMama, has been gone all week…she is in Hawaii on business…ahhhh the life of a travel writer. My son is a Mama’s boy and despite my effort to shower him with love to fill the void, it just isn’t the same as what his Mommy can give him.
It’s been a tough week for him…I’ve been emailed not once, but twice from his teacher about misbehavior. For my part, I’ve stayed calm and understanding…something I’ve diligently worked on.
After he broke the plate I sent him to his room…this gave me some time to cool down and assess my options. Then I cleaned it up but left the vacuum and garbage out so he could see the aftermath. During this whole time my 8-year old daughter was all over me. “What are you going to do Daddy? Are you going to spank him? Are you going to take something away? Does he still get dessert?” Ugh.
After about 10 minutes I went upstairs, put him on my lap, and calmly discussed the situation. What concerned me was when he described himself as a “bad boy.” I said, “no, you’re not a bad boy, you’re a good boy that sometimes makes bad decisions, but no matter what you do I will always love you.” That seemed to help. Then he asked if he still got to have dessert. I told him he could have half a dessert if he earned it…and he did…he cleaned up and then produced the product you see in the picture to the right. Who’s your Daddy?!
My Market Watch. Bonds Up – Rates/Pricing Similar to Yesterday Morning. Fed Meets Next Week – QE Tapering. The 30-year Fannie Mae bond is trading higher +19bps on the day. Trading is otherwise quiet. I suspect the trading is slow because everyone is gearing up for the big week we have next. Yes, the Fed will meet to discuss monetary policy. And it’s all about QE tapering.
What is QE – Quantitative Easing? Quantitative Easing is a term used to describe the Fed’s intervention strategy into the bond market. In an effort to stabilize the markets, the Fed employed a strategy of buying billions of dollars of mortgage backed securities – MBS – bonds. Put another way, the Fed created an artificial market of low-interest rates during our economic crisis by buying bonds each month. This strategy has kept rates low and stimulated the mortgage business for a long time.
What does Tapering QE mean? A few months ago Ben Bernanke and the Fed announced their strategic decision to begin tapering QE. This means they intend to decrease the amount of bonds the Fed buys. They are doing this because they feel the economy has recovered enough to withstand a more natural lending environment where they don’t have to buy billions of bonds each day. Because the Fed has said it will decrease, or taper its buying of bonds, traders have pulled their investments out of bonds and as a result rates and pricing have worsened dramatically over the last 5 months.
What is all the buzz about next week’s meeting? Many believe our economy is strong enough to withstand tapering…they want the Fed to significantly decrease the buying of bonds, and right now. Others, like myself, feel the economy is still extremely fragile and want the government to continue buying bonds…or at the very least limit tapering to a minimum and stretch it out over a long period of time. Next week everyone is expecting some insight from the Fed on what they intend to do.
How will next week’s Fed Meeting affect us? If traders interpret the statements as a reaffirmation of QE tapering, and if they feel the Fed intends to accelerate either the amount of tapering or the speed of tapering, then the bond market will drop and rates/pricing will get worse…much worse. On the other hand, if the Fed softens their language, and they give traders the impression that QE will continue in strong force for some time to come, then we could see a significant reversal in bond trading. In this case traders would invest in bonds and when that happens rates/pricing stabilize or improve.
What’s going to happen? I have no blanking idea. As I always say, if I knew such things I’d be a gazillionaire. But I will try. But not today…next week….
My Schedule: I have a meeting this morning until 10:30a and then will return all calls and emails. This afternoon I have to take my son to the doctor so I will be unavailable after 2p.
Wholesale: Non-Conforming Matrix & Guidelines
Correspondent: Non-Conforming Matrix & Guidelines
QE Tapering Explained – For my explanation QE and tapering, read my QE analysis from an earlier post.
LO Comp, Ability To Repay Qualified Mortgages. Here is Fannie’s announcement about ATR – Ability To Repay, QM – Qualified Mortgages, and the new compensation rules: Fannie Guide Announcement. And here is a video by the Consumer Financial Protection Bureau – CFPB explaining Qualified Mortgages and Ability To Repay guidelines :